Massive homes project rises from Denver's runways

Tuesday, November 29, 2005

By Christopher Montgomery
Plain Dealer Reporter

Denver — If you took Stapleton, site of Denver’s former airport and now the country’s largest urban redevelopment project, and superimposed it on Cleveland, it would stretch from the Warehouse District to University Circle and cover everything north to Lake Erie.

Cleveland’s Forest City Enterprises Inc. is the master developer. The scope of what it will try to do there during the next 15 to 20 years is staggering:

When it’s completed, Stapleton will hold about 5 percent of the city’s population and will increase Denver’s park system by a quarter. Cost estimates vary, but most put the price tag around $4 billion.

Stapleton has come to represent Forest City’s full range of capabilities, built up over years on smaller urban projects. It’s also made Forest City something of a rock star in the development community.

“There are hardly any precedents for what they’re doing at Stapleton,” said Richard Rosan, president of the Urban Land Institute in Washington, D.C., a nonprofit research organization. “The magnitude of that project puts Forest City in a different league in the world.”

Civic partnerships tackle planning

Civic groups and city leaders had kicked around ideas about Stapleton International Airport since 1989. In 1993, the Stapleton Redevelopment Foundation, formed by a group of business leaders, partnered with the city to accelerate planning. The foundation would focus on Stapleton; the city and its new mayor, Wellington Webb, would concentrate on a new airport.

Raising $3 million, the foundation hired a small staff, held scores of community meetings and talked with urban planners and others around the world.

Stapleton closed in 1995 as the new airport opened farther east. In the same month, the foundation released the Stapleton Development Plan, commonly called the Green Book. It has guided everything that has happened since.

Tom Gougeon, the foundation’s chief executive, said the Green Book formed around the ideas of sustainability and a mix of housing, offices and retail — an antidote to suburban sprawl. The 81 pages laid out a detailed vision: a series of neighborhoods that resembled Denver’s existing framework. Traditional street grids, high density, parks, public transportation, office and retail space within walking distance.

Denver City Council adopted the plan. A new organization, Stapleton Development Corp., was formed to oversee development. It considered doing the work itself, but decided in early 1998 to find a master developer.

A hundred inquiries were whittled to four finalists, including Forest City, which then had almost no property in Denver. Local officials said Forest City was impressive and unyielding. They said the executives most involved in the selection were co-Chairmen Albert Ratner and Sam Miller; Greg Vilkin, out of the Los Angeles office; and Ron Ratner, who runs the residential group and is Albert’s cousin.

The Forest City team promoted its portfolio of properties, focusing on big mixed-use projects: Tower City Center in Cleveland; the University Park biotech campus in Cambridge, Mass.; the MetroTech office complex in Brooklyn, N.Y.

Hands-on executives impress local officials

What raised Forest City’s prospects the most, local officials said, was Albert Ratner’s thorough grasp and appreciation of the Green Book.

“When Al Ratner is sitting across the table and we’re going point by point through these principles that we care about, and he has as much understanding of what’s going on as we do, that meant a lot to us,” said Happy Haynes, who was city councilwoman for Stapleton’s district and a member of the development corporation’s board.

Richard Anderson, chief executive of the development corporation, said he liked what he heard when he called mayors of cities where Forest City had projects.

“They talked about how when Forest City comes into your community, they come in in a big way,” Anderson said. “They get to know all of the political leaders. They contribute to the local charities. They really are interested in being thought of as good people in the community.”

The development corporation unanimously chose Forest City in late 1998. Negotiations after that lasted more than a year and almost broke down. But Forest City succeeded, relying on a quickly assembled team of local employees and consultants:

To run Forest City Stapleton Inc., it picked John Lehigh, who led the effort to build a new stadium for baseball’s Colorado Rockies.

Jim Chrisman, its senior vice president of development, was one of the architects of the Green Book.

Tom Gleason, its vice president of public relations, had been press secretary for Mayor Webb’s predecessor.

Its consultants included Maria Garcia Berry, chief executive of CRL Associates Inc., who is considered the most influential lobbyist in the city and has had a hand in almost every major development project in Denver in the past 15 years.

She said CRL was approached by other developers but decided to work for Forest City in part because of the accessibility of its executives.

“If we needed Albert Ratner and Sam Miller in town, Albert Ratner and Sam Miller would be in town,” said Garcia Berry, who still carries in her purse a crucifix blessed by the pope, which Miller gave to her.

Sticking points in the negotiations centered on financing and infrastructure costs. The talks ultimately boiled down to the relationship between Albert Ratner and Mayor Webb, said Laura Aldrete, the city’s former Stapleton project manager.

Forest City’s Gleason said that “Albert’s the kind of guy who would say, ‘Mayor, let’s shake on this.’ You know, screw the attorneys, because I know you’ll keep your word, and I’ll keep my word.”

Hundreds of millions in incentives for a deal

The development agreement was unveiled in February 2000. The city would demolish buildings, remove the runways and clean up the site. Forest City would pay almost $80 million to buy the 2,900 developable acres.

Forest City was responsible for infrastructure — including streets, water and sewer mains and drainage facilities. Projected cost for that: $674 million.

A $294 million “tax-increment financing” package would partly reimburse Forest City — it would get a cut of the sales and property taxes generated on the site. The TIF financing would also help pay for parks and other open spaces, police and fire stations and at least five schools. In addition, two metropolitan taxing districts, which levy special taxes on property owners, would be established.

From the city’s point of view, the main benefit was that Forest City took all the risk to pay for the infrastructure. So far, the company has about $100 million tied up in the project, according to the development corporation.

Forest City also pledged to help connect Stapleton with the surrounding neighborhoods, which had large black and Hispanic populations and were run-down. It has helped bankroll the Stapleton Foundation, which has offered money and help to local schools and community groups.

Later, the company also agreed to develop 1,600 single-family homes and apartments, or about 13 percent of the total housing stock, for lower-income families.

Stapleton is garnering praise from unlikely quarters.

“We think it’s a good example of the way we should be doing new development,” said Will Coyne, land-use advocate for Environment Colorado, a research and advocacy group in Denver that typically has a jaundiced view of big developers.

He said Denver had grown for decades through unchecked suburban sprawl. “Stapleton has come in and kind of redefined that,” Coyne said.

Stapleton has had its share of stumbles. There was a minor uproar when Forest City announced plans for a 750,000-square-foot big-box retail center on the western edge. When Quebec Square opened in 2002, devotees of the Green Book didn’t like what they saw: broad asphalt parking lots, cookie-cutter design and tenants that included Wal-Mart, Sam’s Club and Home Depot.

Forest City argued that it provided retail and jobs to a generally underserved part of Denver and produced sales-tax revenue to pay for the rest of the development. Quebec Square generates about $8 million in taxes a year.

Another shopping center, this one 1.2 million square feet, is under construction north of Quebec Square. It is being fashioned as a “lifestyle center,” like Crocker Park in Westlake, with a main street and sidewalks, and hasn’t run into the same level of opposition.

There was a flap in 2002 over the number of minority contractors and construction workers hired to work at Stapleton. Groups argued that half of the construction jobs should be given to minorities. Forest City rejected that idea but has increased the number of minority workers.

Some affordable-housing advocates are also disappointed. Forest City’s program has lagged because of tough market conditions and problems with other developers.

“If Denver residents are going to give up $300 million in taxes, the housing mix should parallel the needs of the Denver community, but it doesn’t,” said Tony Robinson, a research fellow at the union-affiliated Front Range Economic Strategy Center.

Instead, Robinson said, the main goal at Stapleton has been attracting suburban wealth back to the city. He said the result is a development that’s out of the price range of the average Denver resident and isn’t the integrated, mixed-use urban community it purports to be. Housing prices at Stapleton, which topped out at $600,000 at the start, have been steadily rising because of the development’s popularity.

Mixed-use goal proves elusive

That raises a question even Stapleton’s supporters don’t have an answer to yet: Is a true mixed-use development possible?

So far, Stapleton is primarily residential with some retail at its edges. For-sale housing, buoyed by a good overall market in Denver, has far exceeded Forest City’s expectations. The regional retail portion is going according to plan. What hasn’t materialized is demand for office space.

Out of the roughly 10 million square feet of office space Forest City projected, only 34,000 square feet have been built. The developer itself occupies about half of that space. Two new medical office buildings — 65,000 square feet — will be finished next year.

Denver’s office market, hot during the 1990s high-tech boom, collapsed during the recession and hasn’t recovered. That short-circuited Forest City’s original business plan — to reap the biggest profits from office leases — and has complicated the goal of making Stapleton into the kind of place where people can live near the workplace.

It’s making it harder, for instance, for Forest City to plan for future town centers, which have small retail and restaurants on the ground floor and office space and apartments on top. There are supposed to be four spread throughout the development.

The one it has built, on the western edge, has been a success. But for many residents, it’s too far to reach by foot. Life at Stapleton, for the most part, is still car-based, although it will be served by an expanded light rail system in the future.

Steve Turner, Stapleton project manager for the city, said Forest City is still sticking with its original projections. “But for how long can they hold? I mean, at some point if the market doesn’t come back in the next five to 10 years, I would suspect that they would come to us and say they may need to do something else, maybe more residential.”

Despite Stapleton’s foibles, its residents are a generally optimistic bunch. Bill Fulton, a former president of Stapleton United Neighbors, the first neighborhood organization to sprout, is one of them.

He said he has some concerns, including that rising house prices will make Stapleton less diverse. There aren’t any statistics on Stapleton’s racial makeup, but it appears to be overwhelmingly white. Residents and city officials concurred, even though Forest City maintains that it’s more diverse than it looks.

But Fulton said he’s confident Forest City will do what it takes to develop Stapleton the right way. “Their ability to reap long-term profit hinges on keeping residents deliriously happy and talking about what a great place this is.”

It’s important to remember, he said, that Stapleton is a work in progress. “It’s not Mayberry or a return to the ’50s. But it’s a big improvement.”